Starbucks brews instant coffee for cash strapped customers

by Staff, Brand Republic 13-Feb-09, 09:00

NEW YORK - Starbucks, which built its business on selling $4 cups of coffee, is to offer customers instant or soluble coffee for less than $1, which it claims tastes as good as the real thing.

The Seattle-based retail coffee giant will begin selling an instant variety of coffee, called Starbucks Via, next month at selected stores.

It follows a move last summer to offer US diner-style free refills at its UK outlets in response to belt-tightening consumers and the economic downturn.

Starbucks says it has been working on the product for more than 20-years and claims that Starbucks Via is a soluble version of its fresh brewed coffee, which will be sold in slender packets in store.

Starbucks, in a statement, said: "Starbucks will host exclusive events next week in New York and other cities to introduce a breakthrough new product.

"We have been working on this project for more than 20 years, and have a patent pending on the technology that delivers Starbucks coffee in an instant form."

The instant coffee market is worth around $17bn globally -- Starbucks said its new product offers the struggling firm a significant opportunity.

In the UK the opportunity is particularly large. Instant coffee accounts for 81% of all coffee sales.

Selling instant coffee, it hopes, will allow Starbucks to generate substantially more revenue from its existing retail stores -- some of which it plans to close.

Last month Starbucks said it was to cut 6,700 of the group's 167,000 retail staff and shut 300 underperforming stores after reporting a 69% fall in profits during the first quarter of the year.

The entrance of Starbucks into what is traditionally seen as the poor quality and taste end of the market could transform the market said Howard Schultz, chief executive of Starbucks, who described the introduction as a "transformational event" for the company.

Schultz said that people being served the coffee could not tell the difference between instant and fresh brewed.

Starbucks plans to offer its soluble coffee in packs of three priced at $2.95 or in packs of 12 for $9.95, which would work at around 83 cents a cup, significantly cheaper than its rivals.

Comments

Matt Saunders - 13/02/2009

So they've been working on it for 20 years and it just happens to be ready for the economic downturn... Maybe Starbucks engineered the financial crisis in order to create the perfect conditions for their new product, maybe.

Graham Mills - 13/02/2009

If it really does taste the same is this not the classic error of undercutting your own market.

Sara Lofthouse - 13/02/2009

Matt Saunders:...Maybe Starbucks engineered the financial crisis in order to create the perfect conditions for their new product, maybe. Starbucks: We've been rumbled boys!

joe woollen - 13/02/2009

Eh - do i buy these "packs" in Starbucks or in a supermarket where I normally buy packet coffee?

Gordon Macmillan - 13/02/2009

Think you are going to be able to buy them in both. You can buy Starbucks in Tesco so don't see why they won't sell it there as well.

Starbucks UK has no comment to make at the moment other than the global statement in the story.

WALTER DENNY - 13/02/2009

Surely it can't taste as bad as their fresh brewed coffee!

GreatGazu - 14/02/2009

I'm not sure what all the fuss is about over $1 instant coffee. It's an inferior product for a reduced price. Not exactly revolutionary.

Michalis Krokidis - 14/02/2009

I'm just wondering how close this new product is to the recent decision of Mr. Schultz and his team of going back to Starbucks roots, saying first that brand's experience faces the warning of commoditization \(see related post at starbucksgossip.typepad.com).